Allstate Ins. Co. v. Horn, s. 58803

• Decision Date: 26 November 1974
• Docket Number: 59489,Nos. 58803,s. 58803
• Citation: 24 Ill.App.3d 583,321 N.E.2d 285
• Parties: ALLSTATE INSURANCE COMPANY, a corporation, Plaintiff- Appellant, Cross-Appellee, v. John HORN, Defendant-Appellee-Cross-Appellant.
• Court: United States Appellate Court of Illinois

Page 285

321 N.E.2d 285

24 Ill.App.3d 583

ALLSTATE INSURANCE COMPANY, a corporation, Plaintiff- Appellant, Cross-Appellee, v. John HORN, Defendant-Appellee-Cross-Appellant.

Nos. 58803, 59489.

Appellate Court of Illinois, First District, Second Division.

Nov. 26, 1974.

Hinshaw, Culberton, Moelmann, Hoban & Fuller, Chicago, for plaintiff-appellant; John L. Kirkland, D. Kendall Griffith, Stanley J. Davidson, Chicago, of counsel.

Herbert M. Berman, Daniel N. Kadjan, Chicago, for defendant-appellee; Arnold & Kadjan, Chicago, of counsel.

STAMOS, Justice.

Allstate Insurance Company (Allstate) appeals from an order of the circuit court of Cook County which dismissed, on the merits, Allstate's action for declaratory judgment and confirmed an arbitration award in favor of John Horn. Horn has cross-appealed and seeks, in the event that the judgment of the circuit court is either reversed or remanded, a reversal of an earlier order denying defendant's motion for summary judgment.

The facts are virtually undisputed. Allstate issued Christ Lindbom an automobile liability policy which included uninsured motorist coverage in the amount of $10,000. The policy provided, Inter alia:

Allstate will pay all sums which the insured shall be legally entitled to recover as damages from the owner or operator of an uninsured automobile because of bodily injury, sustained by the insured, caused by accident and arising out of the ownership, maintenance or use of such automobile.

The 'insured' means:

1. The named insured and his relatives;

2. Any other person occupying an insured automobile;

The policy defined 'occupying' as 'in or upon, or entering into or alighting from' the insured vehicle.

Shortly after midnight on May 31, 1969, the defendant, John Horn, was riding in the Lindbom vehicle which was being driven by Bruce Lindbom, a relative of the named insured. Lindbom parked the car on the northeast side of Clybourn Avenue, which runs northwest to southeast and is six lanes wide including a lane in each direction for parked cars. Both parties exited the car, walked across to the south side of Clybourn and entered a restaurant. Subsequently, the parties exited the restaurant and were preparing to cross Clybourn to the Lindbom vehicle. Upon stepping from the sidewalk Lindbom and defendant walked between two parked cars on the south side of the street. At that point an automobile operated by an uninsured motorist was proceeding northwest on the north side of the street. The driver crossed the centerline, entered the southeast bound lanes and struck Lindbom and defendant while they were standing two feet from the parked cars in the southbound lane closest to the parked vehicles. At the time the parties were injured they were at a point approximately 24 feet from the Lindbom vehicle.

On June 5, 1969, plaintiff received a notice of attorney's lien, indicating that a certain law firm was representing Bruce Lindbom in a claim against plaintiff for personal injuries under the above quoted uninsured motorist provision. In reply to this lien plaintiff sent a form letter to Lindbom informing him that the claim could not be identified and that Allstate needed the policyholder's name and address, the policy number, and the date and location of the accident. Through a telephone conversation with Lindbom, plaintiff learned that defendant Horn had been with Lindbom at the time of the accident. On June 23, 1969, before any investigation of the occurrence had been conducted, plaintiff sent defendant a form letter which is customarily sent to parties reported to be with an insured at the time of an accident. The letter requested defendant to fill out the enclosed 'Notice of Injury--Proof of Loss' form, and to have his doctor complete certain medical reports. The letter further stated that when Allstate received the requested reports and final medical bills, defendant's claim would be processed for payment. Allstate did not receive any response to the letter.

In December of 1970, Lindbom's claim was adjusted and settled. ¹ The first document plaintiff received indicating that defendant was making an uninsured motorist claim was a copy of a 'Demand for Arbitration' which had been filed with the American Arbitration Association (hereinafter Association). A copy of the demand was received by plaintiff on February 1, 1971, a year and eight months after plaintiff's letter to defendant. Plaintiff did not have an open file on the claim at this time, and upon receipt of the demand, Allstate forwarded the notice to legal counsel.

On March 2, 1971, the arbitration hearing was set for April 21, 1971. On March 8, 1971, plaintiff's attorneys sent a letter to defendant's attorneys stating that Allstate had received the demand for arbitration and requested that defendant appear in counsel's office on April 29, 1971, for the purpose of taking his statement pursuant to a condition of the uninsured motorist endorsement. The letter further stated:

In addition, we wish to inform you that a coverage question exists on this file. We will be unable to proceed with an arbitration hearing until same is resolved.

A copy of this letter was sent to the Association. On March 11, 1971, the Association wrote a letter to plaintiff's counsel acknowledging receipt of the above letter. The Association then sent a copy of this letter to defendant's attorneys and requested that the claimant, John Horn, file a reply to Allstate's assertion that a coverage question existed. The claimant did not reply and on March 23, 1971, the Association sent his counsel another letter requesting a reply.

On April 9, 1971, defendant's counsel telephoned the Association and advised that he would not agree to a continuance of the April 21st date. The Association then sent a letter to counsel for both parties stating that if Allstate did not file a declaratory judgment action before the April 21st date, and if it still requested a continuance on the hearing date, it would be necessary to get the Arbitrator's ruling on whether or not the hearing should proceed.

On April 14, 1971, the Arbitrator requested a continuance of the hearing due to trial proceedings which would produce a conflict for the Arbitrator. On April 20, 1971, it was determined that the first date upon which the Arbitrator would be available would be May 20, 1971, whereupon the hearing was continued until that date.

On May 14, 1971, plaintiff's counsel took the statement of John Horn, and on May 19, 1971, the Arbitration hearing was reset pursuant to plaintiff's request for July 8, 1971. On June 25, 1971, the Association received a letter from plaintiff's counsel requesting a continuance because he would be out of town. Defendant's attorney agreed to the continuance and suggested the date of July 28, 1971. On July 7, 1971, the hearing was reset for August 16, 1971, because the Arbitrator would not be available on July 28. The August 16 date was marked 'final.'

On August 13, 1971, a Friday, plaintiff filed its complaint for declaratory judgment alleging that the defendant was walking as a pedestrian at the time he was struck by the uninsured motorist, and therefore, was not entitled to uninsured motorist coverage because he was not then an 'occupant' of the insured vehicle as defined by the policy. Allstate requested that the court find that the defendant was not entitled to any benefits of the uninsured motorist coverage and that the court immediately enter an order enjoining defendant from proceeding before the Association until such time as the coverage question would be determined.

On April 16, 1971, the following Monday and the date on which the arbitration hearing was to be held, plaintiff filed a motion in the circuit court asking that all proceedings before the Arbitrator be stayed pending a hearing before the court on the coverage issue. The motion was denied and that afternoon the arbitration hearing was held. Counsel for plaintiff appeared at the hearing, stated that Allstate would stand on its position that there was no coverage, and refused to participate in the arbitration proceedings. On August 18, 1971, the Arbitrator rendered an award of $10,000 to defendant.

On November 13, 1971, plaintiff filed an amendment to its complaint for declaratory judgment seeking the additional relief that the award entered by the Arbitrator on August 18, 1971, be vacated and set aside. On December 1, 1971, defendant filed a 'Petition to Confirm Award of Arbitrator' and also filed an answer to the complaint for declaratory judgment in which he alleged that defendant was an 'occupant' of the insured vehicle, and, as an affirmative defense, alleged that plaintiff was estopped to assert any coverage defenses due to its dilatory tactics in denying the claim. Based upon its finding that plaintiff was estopped to assert its policy defense, the trial court dismissed the declaratory judgment action on the merits and confirmed the award of the Arbitrator.

Plaintiff initially contends that the trial court erred in holding that plaintiff was estopped from asserting its coverage defense. We must agree. Estoppel has been defined as follows:

Estoppel * * * arises whenever one by his conduct, affirmative or negative, intentionally or through culpable negligence, induces another to believe and have confidence in certain material facts, and the latter having the right to do so, relies and acts thereon, and is as a reasonable and inevitable consequence, misled, to his injury. Kelly v. Terrill, 132 Ill.App.2d 238, 240--241, 268 N.E.2d 885, 887.

It is defendant's theory that estoppel applies to the present cause in that the letter of June 23, 1969 sent by plaintiff to defendant induced defendant to believe that plaintiff would pay his claim; and that plaintiff's delay in not filing its declaratory judgment until more than two years after the accident prevented defendant from pursuing his remedies against the uninsured motorist. Since defend...